ParkOhio Announces Strong 2011 Results -- Sales up 19%

-- Net Income up 93%

-- EPS up 90%

CLEVELAND, March 5, 2012 /PRNewswire/ -- Park-Ohio Holdings Corp. (NASDAQ: PKOH) today announced results for its fourth quarter and year ended December 31, 2011.

FOURTH QUARTER RESULTS

Net sales were $234.6 million for fourth quarter 2011, an increase of 6% from net sales of $220.5 million for fourth quarter 2010. ParkOhio reported net income on a GAAP basis of $18.9 million or $1.58 per share dilutive for 2011 compared to $3.5 million or $.30 per share dilutive in 2010. Net income in 2011 increased by $11.3 million due to the reversal of the Company's valuation allowance against its U.S. net deferred tax assets compared to a full valuation allowance in 2010.  Net income, before the reversal of the Company's valuation allowance against its U.S. net deferred tax assets was $7.7 million or $.64 per share dilutive compared to $.30 per share dilutive in 2010.

FULL YEAR RESULTS

Net sales were $966.6 million for 2011, an increase of 19% from net sales of $813.5 million for 2010. Net income on a GAAP basis for 2011 was $29.4 million or $2.45 dilutive compared to $15.2 million or $1.29 per share dilutive for 2010. Net income in 2011 increased by $11.3 million related to the reversal of the Company's valuation allowance against its U.S. net deferred tax assets compared to a full valuation allowance in 2010. Also included were a restructuring and asset impairment charge of $5.4 million, refinancing charges of $7.3 million and a tax provision associated with the refinancing of $2.0 million. Included in the 2010 results were gains of $2.2 million representing the excess of the aggregate fair value of purchased net assets over the purchase price for the ACS business unit acquisition and a $3.5 million asset impairment charge related to the write down of an investment.

Net income, before the reversal of the deferred tax valuation allowance, the restructuring and asset impairment charges and the refinancing charges in 2011 was $33.0 million or $2.75 per share dilutive.  Net income, before the asset impairment charges and gain on acquisition in 2010, was $15.2 million or $1.28 per share dilutive.

Edward F. Crawford, Chairman and Chief Executive Officer, stated, "We would like to thank all the stakeholders for their continuing support and we look forward to the future."

A conference call reviewing ParkOhio's fourth quarter results will be broadcast live over the Internet on Tuesday, March 6, commencing at 10:00 am Eastern Time.  Simply log on to http://www.pkoh.com.

ParkOhio is a leading provider of supply chain logistics services and a manufacturer of highly engineered products.  Headquartered in Cleveland, Ohio, the Company operates 31 manufacturing sites and 44 supply chain logistics facilities.  

This news release contains forward-looking statements, including statements regarding future performance of the Company that are subject to certain risks, uncertainties and assumptions.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected.  

Among the key factors that could cause actual results to differ materially from expectations are: the cyclical nature of the vehicular industry; timing of cost reductions; labor availability and stability; changes in economic and industry conditions; adverse impacts to the Company, its suppliers and customers from acts of terrorism or hostilities; the financial condition of the Company's customers and suppliers, including the impact of any bankruptcies; the Company's ability to successfully integrate the operations of acquired companies; the uncertainties of environmental, litigation or corporate contingencies; and changes in regulatory requirements.  These and other risks and assumptions are described in the Company's reports that are available from the United States Securities and Exchange Commission.  The Company assumes no obligation to update the information in this release.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

(In Thousands, Except per Share Data)


Three Months Ended


Year Ended


December 31,


December 31,


2011

2010


2011

2010









Net sales

$234,593


$220,532


$966,573


$813,522

Cost of products sold

196,227


184,051


799,248


679,425

  Gross profit

38,366


36,481


167,325


134,097

Selling, general and administrative expenses

24,849


26,300


105,582


91,755

Restructuring and asset impairment charge

0


0


5,359


3,539

  Operating income

13,517


10,181


56,384


38,803

Gain on acquisition of business

0


0


0


(2,210)

Interest expense

5,845


5,720


24,817


23,792

Debt extinguishment costs

0


0


7,335


0

  Income before income taxes

7,672


4,461


24,232


17,221

Income taxes

(11,271)


939


(5,203)


2,034

  Net income

$18,943


$3,522


$29,435


$15,187









Amounts per common share:








  Basic

$1.62


$0.31


$2.54


$1.34

  Diluted

$1.58


$0.30


$2.45


$1.29









Common shares used in the computation:








  Basic

11,711


11,408


11,580


11,314

  Diluted

11,998


11,917


11,999


11,807









Other financial data:








  EBITDA, as defined

$18,327


$15,668


$80,133


$63,987

















Note A--EBITDA, as defined, reflects earnings before interest, income taxes, and excludes depreciation, amortization, certain non-cash

charges and corporate-level expenses as defined in the Company's Revolving Credit Agreement.  EBITDA is not a measure of performance

under generally accepted accounting principles ("GAAP") and should not be considered in isolation or as a substitute for net income, cash

flows from operating, investing and financing activities and other income or cash flow statement data prepared in accordance with GAAP

or as a measure of profitability or liquidity.  The Company presents EBITDA because management believes that EBITDA

is useful to investors as an indication of the Company's satisfaction of its Debt Service Ratio covenant in its Revolving Credit Agreement

and because EBITDA is a measure used under the Company's revolving credit facility to determine whether the Company may incur additional debt

under such facility.  EBITDA as defined herein may not be comparable to other similarly titled measures of other companies.

The following table reconciles net income to EBITDA, as defined:

















Three Months Ended


Year Ended


December 31,


December 31,


2011

2010


2011

2010

Net income

$18,943


$3,522


$29,435


$15,187

Add back:








  Income taxes

(11,271)


939


(5,203)


2,034

  Deferred tax impact netted in acquisition gain

0


0


0


1,354

  Customer relationship asset upon acquisition

0


0


0


(990)

  Interest expense

5,845


5,720


24,817


23,792

  Depreciation and amortization

4,195


5,023


16,028


17,122

  Restructuring and asset  impairment charge

0


0


5,359


3,539

  Debt extinguishment costs

0


0


7,335


0

  Miscellaneous

615


464


2,362


1,949

EBITDA, as defined

$18,327


$15,668


$80,133


$63,987









Note B--On April 7, 2011, the Company completed the sale of $250.0 million in aggregate principal amount of 8.125% Senior Notes due 2021 (the "Notes").

The Notes bear an interest rate of 8.125% per annum and will be payable semi-annually in arrears on April 1 and October 1 of each year commencing

on October 1, 2011.  The notes mature on April 1, 2021.  The Company also entered into a fourth amended and restated credit agreement

(the "Amended Credit Agreement").  The Amended Credit Agreement, among other things, provides an increased borrowing facility up to $200.0 million,

extends the maturity date of the borrowings under the revolving credit facility to April 7, 2016 and amends fee and pricing terms.  Furthermore the Company

has the option to increase the availability under the revolving credit facility by $50.0 million. The Company also purchased all of its outstanding 8.375%

senior subordinated notes due 2014 in the aggregate principal amount of $183.8 million that were not held by its affiliates, repaid all of the term loan A

and term loan B outstanding under its then existing credit facility and retired the 8.375% senior subordinated notes due 2014 in the aggregate principal

amount of $26.2 million that were held by an affiliate.  The Company incurred debt extinguishment costs related primarily to premiums and other

transaction costs associated with the tender and early redemption and wrote off deferred financing costs associated with the 8.375% Senior

Subordinated Notes totaling $7.3 million ($.62 per share on a diluted basis) and recorded a provision for foreign income taxes of $2.1 million

($.18 per share on a diluted basis) resulting from the retirement of $26.2 million that were held by an affiliate.


Note C--The following table reconciles net income to net income, adjusted to exclude refinancing charges and an associated income tax provision,

restructuring and asset impairment charges and gain on acquisition of business and an associated income tax provision.  The Company presents net

income adjusted for these items, to provide an indication of the Company's core operating performance and facilitate a comparison between the

2010 and 2011 periods:

















Three Months Ended


Year Ended


December 31,


December 31,


2011

2010


2011

2010

Net income, as reported

$18,943


$3,522


$29,435


$15,187

Full reversal of the deferred tax asset valuation allowance

(11,271)


0


(11,271)


0

Refinancing charges

0


0


7,335


0

Provision for income tax associated with the refinancing

0


0


2,100


0

Gain on acquisition of business

0


0


0


(2,210)

Provision for income tax associated with the gain on acquisition of business

0


0


0


(1,354)

Restructuring and asset impairment charges

0


0


5,359


3,539

Net income, as adjusted

$7,672


$3,522


$32,958


$15,162









Note D--In the third quarter of 2011, the Company recorded a $5.4 million restructuring and asset impairment charge relating to the write down of

underperforming assets in its rubber products unit.  In the third quarter of 2010, the Company recorded a bargain purchase gain of $2.2 million

from the acquisition of certain assets and assumption of specific liabilities of Assembly Component Systems Inc. representing the excess of the aggregate

fair value of the purchased net assets over the purchase price and a $3.5 million asset impairment charge relating to the write down of an investment.


Note E--In the fourth quarter of 2011, the Company reversed its U.S. deferred tax asset valuation allowance of approximately $11.3 million.



CONDENSED CONSOLIDATED BALANCE SHEETS

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES




December 31,


December 31,




2011


2010




(Unaudited)


(Audited)




(In Thousands)

ASSETS






Current Assets






  Cash and cash equivalents



$78,001


$35,311

  Accounts receivable, net



139,941


126,409

  Inventories



202,039


192,542

  Deferred tax assets



20,561


10,496

  Unbilled contract revenue



18,778


12,751

  Other current assets



8,790


12,800









Total Current Assets

468,110


390,309













Property, Plant and Equipment



259,975


253,077


Less accumulated depreciation

198,165


184,294



Total Property Plant and Equipment

61,810


68,783







  Goodwill



9,463


9,100

  Other



74,557


84,340



Total Other Assets

84,020


93,440



Total Assets

$613,940


$552,532













LIABILITIES AND SHAREHOLDERS' EQUITY











Current Liabilities






  Trade accounts payable



$99,588


$95,695

  Accrued expenses



73,651


59,487

  Current portion of long-term debt



1,415


13,756

  Current portion of other postretirement benefits


2,002


2,178



Total Current Liabilities

176,656


171,116







Long-Term Liabilities, less current portion





  Senior Notes



250,000


183,835

  Credit facility



93,000


113,300

  Other long-term debt



3,165


5,322

  Deferred tax liability



1,392


9,721

  Other postretirement benefits and other long-term liabilities

24,285


22,863



Total Long-Term Liabilities

371,842


335,041







Shareholders' Equity



65,442


46,375



Total Liabilities and Shareholders' Equity

$613,940


$552,532



BUSINESS SEGMENT INFORMATION (UNAUDITED)

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

(In Thousands)












Three Months Ended December 31,


Years Ended December 31,



2011


2010


2011


2010

NET SALES


















Supply Technologies

$119,391


$106,861


$492,974


$402,169


Aluminum Products

24,292


33,958


127,044


143,672


Manufactured Products

90,910


79,713


346,555


267,681



$234,593


$220,532


$966,573


$813,522










INCOME BEFORE INCOME TAXES


















Supply Technologies

$6,968


$5,993


$32,565


$22,216


Aluminum Products

(2,895)


434


1,781


6,582


Manufactured Products

11,954


7,952


43,671


28,739



16,027


14,379


78,017


57,537


Corporate expenses

(2,510)


(4,198)


(16,274)


(15,195)


Gain on acquisition of business

0


0


0


2,210


Asset impairment charge

0


0


(5,359)


(3,539)


Interest Expense

(5,845)


(5,720)


(24,817)


(23,792)


Debt extinguishment costs

0


0


(7,335)


0



$7,672


$4,461


$24,232


$17,221



SOURCE Park-Ohio Holdings Corp.



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